I am a University Professor at Syracuse, served as president of the Kauffman Foundation for the last ten years, and am the author of Better Capitalism (Yale, 2012). I teach a course “Failed Cities/Fast Cities” in the university’s Renee Crown Honors College.

Can Austin, TX Become The Dubai Of The United States?

A new book by Daniel Brook describes the “History of Future Cities.” Mumbai, Dubai, Shanghai and St. Petersburg, he argues, will model city life in years to come because they will be more able to attract smart people from all over the world who, congregating together, will make wonderfully creative places to live and work. The book will likely be greeted as further evidence that America’s salad days are behind her.

Certainly one hundred years ago, any list of world cities that held the future in their hands would have been dominated by ones located in the U.S. (London and Berlin might have been included.) New York, Chicago and San Francisco would have made the list and cities like Detroit, St. Louis and maybe Buffalo might have been mentioned as places where the global future would be shaped. Without a doubt Brook’s cities would never have been counted. Dubai didn’t even exist, Bombay was a filthy suburb of London, Shanghai was a decadent capital of a hermit nation bowing deeply toward western pretense, and St. Petersburg was still the confection of a nation without an economy and the reason the French Revolution would be replayed with a Marxist script.

Once Brook’s list might have generated a Sputnik moment in America.How could it be that our cities aren’t going to be where the future plays out? Rather it will be greeted as more evidence that Tom Friedman is right – democracy is incapable of governing as well as regimes where the state is managed by ruler/owner elites, implicitly presumed to be benevolent. Putin as Lee Kuan Yew?

At the turn of the last century America’s economy was the aggregation of the economies of its places. Cities, towns and farming villages, taken together, made the nation’s economy. While our cities in theory competed with one another, they in practice had special roles to play. Our ocean ports couldn’t flourish if they had no product to ship. It was up to the mills of Pittsburgh and the machine shops of Cincinnati to make the innovative best-quality goods that the world demanded, and that only specific cities knew how to make. “Trenton Makes – The World Takes” is an historic sign that Amtrak riders see when passing over the Delaware.

Municipal elites governed American cities to be constantly capable of competing. Local public schools were the best in the world for pragmatic reasons – local industry needed smart people who would be innovative. The industrial elites built universities in their cities as well as museums and libraries and the best hospitals in the world. And, just to show that we were capable of leading the world with a comprehensive vision of cities, community leaders rebuilt our pretty much new cities such that they would be celebrated the world over for their beauty! Brooklyn, Chicago, Philadelphia, Buffalo, and Detroit cut broad avenues through existing street grids as they advanced the Beautiful Cities movement aspiring to make our new cities better than Paris! Simply, America made its cities to be the world leaders in commerce and civic life that they no longer are.

What happened? Recalling that America is often said to be more of an idea than a place, the idea changed. As mentioned, we were once a nation of states and cities that working together made a composite national economy. Markets signaled where opportunities lie and the innovators and entrepreneurs in places like Syracuse could best other cities, as they once did with typewriter production, grow and get rich, if they seized opportunity before anyone else did. Akron figured out tires first! Hartford insured the nation’s boilers. Rochester’s George Eastman got photography into the hands of everyone. Schenectady built locomotives. Milwaukee made electrical switches. Janesville figured out how to make fountain pens portable. Baltimore and Rochester, Minnesota invented themselves into the go-to places for medicine.

Now every one of these cities has to look to Washington for signals as to what their futures should be. With the growth of the federal government, the “owner” elites who once quarterbacked the competitive stance of their cities were displaced by professional elites in Washington. Now our cities are largely supplicants, looking to Washington for direction on all manner of municipal life.

The transfer of power to Washington started with slum clearance during the Depression when the federal government began relocating the poor to more concentrated enclaves of public housing where they were denied ownership of the economy they once had built to support themselves however modestly. Seeing expanding transportation by truck and car as its next opportunity to shape the city, the federal government pushed concrete expressways through most large towns destroying parks, neighborhoods and monuments, ignoring the aesthetic visions that had been the source of municipal pride for generations.

Health care came next. In the 1970s federal efforts to plan the nation’s health care system effectively took management of hospitals out of the hands of local trustees in exchange for paying for new construction under the Medicare/Medicaid acts. Overcapacity that resulted triggered the problem of health care inflation that eventuated in Obamacare that removes local decision-making in medicine rather completely.

But these intrusions into the physical and institutional life of the cities were merely part of the much more important shift of turning to Washington for management of the nation’s economy. As mentioned, until the end of World War II, Washington saw cities as the geographies where business operated. Healthy city economies made for a healthy national economy.

The federal government’s job to was conceive and manage foreign policy that advanced the nation’s economic welfare by doing what would be good for our cities and the industries in them. Every major city had a civic group that studied foreign affairs from a commercial perspective. Cities devised their own place in the world through the customers they made in Europe or Asia. Our principal air-link to the orient was through Minneapolis! The Midwest, after all, produced food for world markets.

The federal government supported a strong currency to facilitate our internal market and ensure foreign markets worked in our favor. Local bankers were integral to the expansion of the nation’s industrial capacity. The Federal Reserve’s branch banks with many governors made sure that Federal Reserve financial policy was influenced by and accommodated local aspirations. The Fed’s role was largely to keep local enthusiasm for expansion in balance, but, there was little doubt that the growth of local economies was central to national economic wellbeing and the central bank’s responsibility. Now, of course, one hears that the Fed’s reserve districts are not even necessary.

Can American cities ever hope to be the platform where the future plays out again? This will never be our fate as long as all eyes turn to Washington. America is not one big city. Local initiative by people who own the local economy is the only solution. Individuals are much better at detecting market opportunity than government. In fact, America’s greatest strength has been its capacity to reinvent our economy by allowing entrepreneurs to disturb incumbent industries and in the course of this process make cities themselves more competitive.

Happily, because America still has states that are ready to turn a blind eye towards Washington there is hope that some American cities will be global players in the future. In the face of the chronic slow growth/near recession conditions that Washington appears powerless to solve, Texas, North Dakota, South Dakota, Florida and Tennessee have encouraged local economies by making policy much more conducive to business. The cities in these states, with their concentration of talent and workers, are certain to benefit. When states eliminate income taxes, lower regulatory burdens, and municipalities manage themselves along fiscally conservative principals, businesses intent on growing will come and, importantly, so will the innovators and entrepreneurs who will make the next generation of businesses.

If any American cities are likely to be included on a list of world beating places in fifty years it is likely that Austin will be first among them. Perhaps because they are Texans, its elite has never seen Washington as the place where the future can be seen or certainly not made. Austin is a hotbed of innovation and business creation. Fueled by a great university and benefiting from a culture that is happy to show anyone how to get things done, its growth over the last two decades has been remarkable. Its governor taunts California on the radio! But, beware, Austin, until Washington sees that our economy is composed by people working in it, close to it, and owning it, all of which happens in cities just like yours, don’t expect anyone will mistake you for Dubai in fifty years.

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